Linked Questions

5 votes
2 answers
1k views

Why is modest inflation a good thing? [duplicate]

I have been reading a BBC news article about inflation in the UK, which is saying that inflation has recently become negative (http://www.bbc.co.uk/news/business-33147660). The article suggests that ...
Karnivaurus's user avatar
1 vote
3 answers
956 views

Basic Reason of Why the Money Supply Needs to Increase? [duplicate]

Hello, all. So I am trying to gain a thorough understanding of why the Fed, or any other Central Bank, needs to keep pumping money into the economy as it grows. My question is not asking why ...
Coolio2654's user avatar
0 votes
1 answer
759 views

Why do central banks print money? [duplicate]

If a country's central bank prints money, it causes inflation. However, apparently, small amounts of inflation is a good thing. Why is the case? What would happen if central banks stopped printing ...
Mahkoe's user avatar
  • 101
2 votes
1 answer
203 views

Why is an inflation rate of 2% optimal? [duplicate]

Learning from different sources I got the impression that the European Central Bank targets at a inflation rate of 2% (not sure along which time scale actually). Can it be explained by general ...
Hans-Peter Stricker's user avatar
2 votes
1 answer
378 views

Deflation and positive real interest rate [duplicate]

Economists say that deflation leads people to postpone their consumption because it increases the value of their money and gives them the ability to consume more in the future. But if a consumer saves ...
Jiří Pešík's user avatar
2 votes
3 answers
226 views

Why is deflation bad for economy? [duplicate]

As now many people are talking about the inflation of US dollar on the account of the COVID-19 pandemic and the printing of trillions of US dollar bills, the price of decentralized cryptocurrencies ...
Fabio Mendes Soares's user avatar
0 votes
1 answer
170 views

Inflation vs Deflation [duplicate]

Why is in flation preferable to deflation? I appreciate this is largely due to the fact that deflation causes a large decrease in demand as people continually wait for prices to decrease, but if ...
John C's user avatar
  • 1
2 votes
1 answer
94 views

Is inflation good? [duplicate]

I was reading that the Spanish received so much gold from their occupation of the Americas, that they had a steep rise in inflation. This caused a rapid increase in investment, as the rich felt that ...
Marc Perry's user avatar
1 vote
1 answer
88 views

Why, in general, do product or service prices rise in time? [duplicate]

My question is simple: Why is it, in general, that the prices of products or services (regardless of demand and supply) are always on the rise in western society? For example, the rent we pay ...
Deschele Schilder's user avatar
26 votes
4 answers
8k views

Could eliminating all taxes and only creating new money theoretically work?

Imagine you had the opportunity to found a new country from scratch (in 2020). Value exchange would be digital, where only the state can create new currency units. Instead of relying on income tax ...
Nico's user avatar
  • 369
5 votes
2 answers
12k views

Does Dogecoin or Bitcoin have a more appropriate rate of monetary inflation?

The supply of new Bitcoins and Dogecoins is depicted in the graph below. The Bitcoin inflation rate is currently higher than the Dogecoin rate, but it reduces sharply to a rate close to zero. It ...
user1205901 - Слава Україні's user avatar
4 votes
5 answers
2k views

Gold coins as currency?

My question is about gold standard. But not the version I always see mentioned (trading bills for gold at a set price). I mean having gold coins in circulation. For example, new currency consists ...
Guest's user avatar
  • 149
6 votes
1 answer
1k views

What are the consequences of deflation in Japan?

Most of the literature I can find about deflation in Japan takes for granted that deflation is bad for the country. I can also find a lot of literature on why deflation is bad in theory. Is there any ...
lvella's user avatar
  • 161
0 votes
5 answers
1k views

What is the point of a constant (thus known) inflation rate?

I have read somewhere (attributed to Milton Friedman) that a good practice of monetary policy is to maintain a constant inflation rate (of 3% per annum, say). What is the point of that? If everyone ...
Hans's user avatar
  • 189
3 votes
2 answers
765 views

Why is wage-induced inflation a bad thing?

More than once, I have heard on the news how the US Federal Reserve would raise interest rates to counter the risk of inflation, even when they indicate that the potential inflation would be caused by ...
papidave's user avatar
  • 131
4 votes
2 answers
577 views

Relation between budget deficit and inflation?

In Iran we have had a high inflation rate for several decades (usually above 20 percent). Some of the top economists of the country say that it is mainly because the government spending is ...
apadana's user avatar
  • 193
2 votes
3 answers
806 views

Why is it that the "right" inflation is positive? [duplicate]

I have read in several places that inflation should be positive, at about 2%-3%. The most recent example was in this answer from another stack exchange site. How is this value obtained and under what ...
Jorge Leitao's user avatar
2 votes
2 answers
265 views

Why should prices come down (in theory) in an educated society with a well-run government?

In Chapter 1 of Robert Kiyosaki's "Rich Dad, Poor Dad", the rich dad says: "In an educated society with a well-run government, prices should actually come down". Is there any ...
Kal's user avatar
  • 121
1 vote
1 answer
137 views

How did the silver standard "insulate" China from the beginning of the Great Depression (1929-1931)

There is a segment from this article that I want to unpack: The Great Depression was a global crisis—almost. Every significant economy was devastated, with one notable exception: China. The reason ...
Arash Howaida's user avatar
1 vote
1 answer
175 views

What is the rationale for setting a 2% target rate for inflation

I have what I think is a simple question, but just like 'how do you balance a checkbook' they don't teach it in school. The only similar question I found was this: Is there any scientific proof that 2%...
stu's user avatar
  • 119
3 votes
1 answer
103 views

Do we have an authoritative reason why inflation is bad?

We all know high inflation is bad. Bad things happen. However: Do we have an authoritative source explaining why inflation is bad and should be prevented? Has anyone pinpointed the main root cause or ...
Trylks's user avatar
  • 143
1 vote
1 answer
103 views

Why isn't high inflation along with robust welfare a 'good' system?

High inflation, by definition, means that the demand for goods and services is higher compared to the demand for currency. In other words, people are more willing to give up currency for goods and ...
Ritesh Singh's user avatar
5 votes
1 answer
86 views

How and on what basis the inflation target is determined?

I have a question at the intersection of Economics and Politics. Every country has her own inflation target. But who, how and on what basis is it determined? Of course, we know that too big inflation ...
Kamil Jędryczek's user avatar
0 votes
1 answer
104 views

Does the tech sector show that we can live with deflation?

Technology has been incredibly deflationary in the past century. A thousand dollars buys you a better iPhone this year than what was available last year. If you want a 60-inch TV, you could get it for ...
Nayuki's user avatar
  • 103
0 votes
1 answer
43 views

Is is possible that two economies have the same real interest rate, same GDP growth, but different inflations?

This is just a conceptual thought experiment. Is it possible that two countries have the same real interest rate, same GDP growth, but different inflation, one higher, one lower? If that's possible, ...
CuriousMind's user avatar